The U.S. Postal Service (USPS) currently owes $99.8 billion in benefit payments to its current and retired workers but does not have the money, and if Congress does not act to fix the problem, the Postal Service may have to “implement contingency plans to ensure that mail delivery continues,” according to a new report by the Government Accountability Office (GAO).
“At the end of fiscal year 2013,” said the GAO, “USPS had about $100 billion in unfunded liabilities: $85 billion in unfunded liabilities for benefits, including retiree-health, pension, and workers’ compensation liabilities, and $15 billion in outstanding debt to the U.S. Treasury—the statutory limit.”
“USPS continues to be in a serious financial crisis, with insufficient revenue to cover its expenses and financial obligations, a continuing decline in profitable First-Class Mail volume, increasing unfunded benefit liabilities, and borrowing limitations due to having reached its $15 billion statutory debt [borrowing] limit,” said Frank Todisco, a GAO chief actuary, in prepared testimony before the House Subcommittee on Federal Workforce, U.S. Postal Service and the Census on Mar. 13. (See USPS Action Needed.pdf)
“Attention to USPS’s unfunded benefit liabilities is important, as they represent scheduled future benefit payments to current and retired employees for which USPS has not set aside sufficient money to pay,” said Todisco.
Those “unfunded benefit liabilities” refer to money owed for postal workers’ pensions, retirees’ health care and workers’ compensation. It also includes some outstanding debt.
According to the GAO report, the USPS at the end of 2013 had about $100 billion ($99.8 billion) in unfunded liabilities. These scheduled payments to current and retired workers included the following:
$48.3 billion, retiree health care
$17.2 billion, workers’ compensation
$19.8 billion, federal pension plan for workers hired before 1984
$500 million, federal pension plan for workers hired after 1984
$15 billion, outstanding debt
According to the GAO, “these unfunded liabilities have increased by 62 percent since fiscal year 2007.”
In 2007, the unfunded liabilities were $61.6 billion, and at the end of 2013 they had grown to $99.8 billion.